Introduction to Marketing Research Lecture 1

Hamendra Dangi hkdangi@fms.edu 9968316938

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Session Break Up
Out line of Sessions Internal Assessment Text Book Introduction to Marketing Research EVPI

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Session Break Up
Imparting Instruction with Software Example ( SPSS , Mini Tab , E-view )- 50 minutes Case discussion /Class activity : 20 Minutes Presentation of class activity (One Group in Each lecture ) ( 10 Minutes )

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INTERNAL ASSESMNET
Synopsis submission : After Two weeks ( 3 marks) Written Test (A) - 11th January 2011 ( 20 Marks) Mid Term review of project : One week after minor test (7 Marks ) Final submission and Viva Voce on Projects 2 Weeks before final exam ( 10 marks) Case Presentation/ class activity - 5 Marks Participation in Class 5 Marks
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Text Book
Business Research Donald Cooper Research Method : C.R Kothari Marketing Research Naresh Malhotra

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Software
Statistical Package for Social Science Mini Tab E View R

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Definition of Business Research

Marketing research is the systematic and objective identification collection analysis dissemination

and use of information

For the purpose of improving decision making related identification and solution of problems and opportunities in the area of marketing to the

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Question for Discussion

List one kind of Marketing research that would be useful to each of the following organization a) The Public transport authority of Delhi b) Major Department store in your area c) A restaurant located near your campus

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 A) PUBLIC TRANSPORTATIONmarket potential; market characteristics; long-range forecasting; pricing research; promotion research; distribution research (b) DEPARTMENT STOREmarket potential; market share; sales analysis; short-range forecasting; long-range forecasting; business trends analysis ( c) RESTAURANTmarket characteristics; short-range forecasting; product research; pricing research; promotion research
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Management Decision Problem Vs. Business Research Problem

Management Decision Problem Business Research Problem

Should a new product be introduced?

To determine consumer preferences and purchase intentions for the proposed new product. To determine the effectiveness of the current advertising campaign.
To determine the price elasticity of demand and the impact on sales and profits of various levels of price changes.
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Should the advertising campaign be changed?

Should the price of the brand be increased?

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Question for Discussion

Discuss the management decision problem for which following research problem might be useful Determine the number of tenants and their annual income in a particular region Evaluate the effectiveness of commercial in a Mall
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Classification of Marketing Research

Problem-Identification Research Research undertaken to help identify problems which are not necessarily apparent on the surface and yet exist or are likely to arise in the future. Examples: market potential, market share, image, market characteristics, sales analysis, forecasting, and trends research. Problem-Solving Research Research undertaken to help solve specific marketing problems. Examples: segmentation, product, pricing, promotion, and distribution research.
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Distinction between Risk and Uncertainty

Risk: A decision making condition under which a manager can list all outcome and assign probabilities to each outcome Uncertainty : A decision- making condition under which a manager cannot list all possible outcome and/ or cannot assign probabilities to the various outcome

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Important Term
Decision Alternative : There is finite number of decision alternative available with the decision maker at each point when decision is made

State of Nature : A possible future condition resulting from choice of a decision alternative depends upon certain factors beyond the control of decision maker
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 Pay off : A numerical value resulting from each possible combination of alternative and state of nature is called Pay off

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Conditional Pay off table

I

A retailer buys an article at Rs.2 per case and sells the same at Rs.5 . He incurs a loss of Rs 2 for every item which is not sold.Previous experience shows that demand varies from 13 to 15 cases a day . Construct Conditional Payoff table
I
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Conditional Pay off Table

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State of Nature/ Strategy

13

14

15

13

39

37

35

14

39

42

40

15

39

42

45

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Example
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A physician purchase a particular medicine n Monday of each week . The medicine must be used within the week following otherwise it will become worthless . The medicine costs Rs 2 per order and physician charges Rs 4 per dose . The past 50 week records are as follow: Dose per Week 20 25 40 60 No of weeks 5 15 25 5

Find : I) EMV ii) EOL iii) EVPI

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Pay off table

Prob. 20 25 40 60

20 25
40 60
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0.10 0.30
0.50 0.10

40 40
40 40

30 50
50 50

0 20
80 80

-40 -20
40 120
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EVPI
EPPI=40x.10+50x.30+80x.50+120x.10 = 71 EVPI = 71-54 =17
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EOL
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Events / Demand

Prob 0.10 0.30 0.50 0.10

20 0 10 40 80 31

25 10 0 30 70 23

40 40 30 0 40 17

60 80 70 40 0 49
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20 25 40 60 EOL

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Question for Discussion

Relevance of EVPI?

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Decision Tree Analysis

A Decision tree is nothing but a graphic exercise of showing the sequence of decision to be made and the possible events that may occur

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Example
A company has leased an oil mine . It may sell it for Rs 25000or drill it for oil . The various possible drilling results are given as under along with probability dist.

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 A company has leased an oil mine . It may sell it for Rs 25000or drill it for oil . The various possible drilling results are given as under along with probability dist. Possible results Probability Dry well Gas well only Oil& Gas Oil well only
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Rs consequences - 1,00,000 45000 98000 1,99,000

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0.10 0.40 0.30 0.20

Question for Discussion

A business man has two investments A and B available to him: but he lacks the capital to undertake both of them simultaneously. He can choose to take A first and then stop, or if A is successful then take B, or vice versa. The probability of success of A is 0.7 while for B is 0.4 .Both require an initial outlay of Rs 2000 and both return nothing if it fails. Successful completion of A will return Rs 3000 while B will return Rs 5000 .Draw the decision tree and determine the best strategy.
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